Greek government expected to avoid tax clash with shipping tycoons

LONDON/ATHENS, Jan 30 (Reuters) - While Greece's new leftist
government seems set on a collision course with the European
Union, it is likely to steer clear of confronting the country's
critical shipping industry.

The Syriza party of Prime Minister Alexis Tsipras, which
swept to power last Sunday, once promised to take on shipowners
and their generous tax allowances. But in recent months, it went
quiet on tackling an industry which, along with tourism, is one
of the few in which Greece remains globally competitive.

Since forming a coalition, Syriza has confronted fellow EU
governments with radical plans to renegotiate Greece's debts,
overturn austerity policies and cancel privatisations. Its stand
on shipowners, by contrast, has been decidedly conciliatory.

"We are here to solve problems, not to create new ones,"
said Economy Minister George Stathakis, who oversees the
shipping portfolio. "There will be dialogue, discussion, and we
will look for the best possible solution," Stathakis, an
economist who comes from a shipping family, said during a
handover ceremony at the shipping ministry.

This attitude may reflect realities of the industry. While
Greek shipping magnates generally operate from the Athens
suburbs or the port of Piraeus, their companies are largely
registered in the likes of the Marshall Islands and the Turks &
Caicos. The firms are often listed on stock exchanges abroad and
their ships often fly foreign flags such as Liberia's.

Any attempt to impose heavy taxes after decades of virtual
fiscal freedom could provoke an exodus of oligarchs and
businesses which are major employers, further damaging an
economy that has endured years of crisis.

Symeon Pariaros, chief administrative officer with
Athens-run and New York-listed shipping firm Euroseas,
said he doubted the government would rapidly make major changes
affecting shipping.

"My feeling is we will not see anything dramatic in the next
months," he told Reuters, citing meetings between Syriza and the
Union of Greek Shipowners. "I don't feel even this leftist
radical government would dare to put at risk such an important
industry in our country."

Greeks operate some of the world's biggest tankers and bulk
carriers. According to former finance minister Gikas
Hardouvelis, they account for 43 percent of the European fleet
and 15 percent of the global total.

While the government badly needs more revenue and a lower
debt burden, it may resist the temptation to milk the cash cow.

"In my discussions with people in high places, in business
and politics, they assured me that the government has other
interests to tackle such as debt forgiveness," said John
Faraclas, a London-based shipping commentator and independent
ship broker.

"The people who will lose if the government attacks Greek
shipping in its entirety will be the seafarers and the people
who work in the offices," said Faraclas, who was an aide to a
former Greek shipping minister. "No Greek government will do
this. There are offshore investments too, employing a great
number of people all over the country."

The Union of Greek Shipowners did not respond to requests
for comment. The new government is expected to outline its plans
during a vote of confidence early in February.

LIBERAL TAX REGIME

Greek shipping has been part of the national economic
lifeblood for thousands of years. More recently, some of its
tycoons became international celebrities such as Aristotle
Onassis, who married the widow of assassinated U.S. President
John Kennedy.

Today the industry accounts for about 7 percent of national
GDP. Many Greeks work in other areas connected to the sector
such as insurance and finance.

While the tycoons benefit from the liberal tax regime, their
commercial attachment to the country may not be taken for
granted. "Greek shipowners have to be very competitive in the
global scene. If the situation in Greece becomes uncompetitive,
they can relocate along with their key employees," said
Alexandros Argyros of Axia Ventures Group, an independent
investment banking boutique focused on shipping and Greece.

"They are not bound by their assets which are floating
around the world and that makes it a lot easier than for any
other businessman," he said.

While Stathakis is considered a more pragmatic voice within
Syriza, a government official said the finance ministry rather
than the shipping ministry would deal with any tax issues.

"Shipowners are protected by the constitution - which means
that if they were to be further burdened, a constitutional
revision would be required," the official said. However, the
official added: "Shipowners would be very welcome to contribute,
depending on their potential, and help boost the economy."

After announcing a halt to the privatisation of the port of
Piraeus on Tuesday, for which China's Cosco shipping group
and four others had been short-listed, the government
indicated it would put the whole programme on hold.

But shipowners were not too concerned, with one describing
this as "a populist move that is so far neutral for shipping".

Nevertheless, Greek shipping sources say many companies have
contingency plans to relocate to jurisdictions such as Monaco or
London. "If they come in too aggressively, the threat of a
flight from Greece is real," one shipowner said.

While shipping has experienced one of its worst downturns,
the owner acknowledged the scale of Syriza's victory. "There is
room for additional contributions by shipping to public
finances. It has to be a measured contribution that takes into
account that it is a global business," he said. "If they do it
in a measured way, people will pay."
(editing by David Stamp)